Welcome to Feldesman's Grants Practice Shorts series where we discuss helpful tips and strategies in common areas of federal grant management. Be sure to check out our other installments on our Grants Practice Shorts page.
Costs of compensation for personal services under Federal awards, including salaries, wages and fringe benefits, are allowable to the extent they are reasonable for the services rendered, consistent with grantee's personnel policies, charged according to benefits received, and documented. 2 C.F.R. § 200.430.
This week we discuss "Time and Effort" documentation requirements under Federal awards.
Time and Effort: Standards for Documentation of Personnel Costs
Federal grant regulations require grantees to support charges to Federal awards for salaries and wages with "records that accurately reflect the work performed." § 200.430(g)(1). Such documentation, which has previously been termed "personnel activity reports," is commonly referred to as "time and effort documentation."
Personnel expenses under Federal awards must:
- Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
- Be incorporated into the official records of the recipient or subrecipient;
- Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities;
- Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy;
- Comply with the established accounting policies and procedures of the recipient or subrecipient; and
- Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
§ 200.430(g)(1)(i)−(vi).
Time and Effort: Review of Interim Charges for Personnel Costs
Grantees may use estimates for drawdown purposes if more detailed actual data is not yet available, but such amounts must be "trued-up" and "[a]ll necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated." § 200.430(g)(1)(vii).
Time and Effort: Personnel Costs Offered as Cost Share
Just as any other costs provided to meet cost share obligations, salaries and wages of employees used to meet cost share requirements under Federal awards must be supported "in the same manner as salaries and wages claimed for reimbursement from Federal awards." § 200.430(g)(4).
Time and Effort: Best Practices
With the flexibility offered under the language adopted when the Uniform Guidance was promulgated, grantees now face the simultaneous benefit and burden of less specific time and effort documentation standards.
A strong case can be made that grantees can meet their obligations for personnel who do not split their time between multiple benefitting activities through semi-annual certifications confirming they work only in furtherance of a single cost objective. Such an approach was permitted for State, Local and Tribal Government personnel under the prior OMB Circular A-87 (Cost Principles for State, Local, and Tribal Governments). Moreover, some Federal agencies have more recently issued suggestions consistent with this approach. See, e.g., DHHS, Health Resources & Services Administration, Recording and Supporting Expenditures – Healthy Grants Workshop, Session 4 (August 7, 2024).
For personnel who split their time between multiple benefitting cost centers, Federal agencies seem likely to expect time and effort certifications no less than monthly for all grantees other than institutions of higher education (IHEs). Such documentation had previously been required under OMB Circulars A-122 (Cost Principles for Non-profits Other than IHEs) and A-87.
In practice, Federal agencies often seem more flexible on this point with IHEs, as IHEs had much more flexible standards under the previously applicable OMB Circular A-21 (Cost Principles for IHEs). For personnel who split their time among multiple benefitting cost centers at IHEs, semesterly or quarterly certifications are, in the author's experience, generally considered adequate by Federal reviewers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
